8 Essential procedure for preparation of statement of affairs are:
1) First of all, take all assets which are not specifically pledged. These assets are taken at their realizable values and not at book values because creditors for their payment are concerned with the realizable values of the assets. It may be noted that calls in arrears are also treated as an asset not specifically pledged to the extent of estimated realizable amount, but uncalled capital is not shown as an asset.
2) Add to the realizable value of the assets not specifically pledged, any surplus from assets specifically pledged.
3) From the total as obtained by adding (1) and (2) first deduct the amount of preferential creditors, then the amount of creditors having a floating charge (e.g., debentures) and the result will be surplus or deficiency as regards debenture holders.
4) Deduct the amount of unsecured creditors from the figure as obtained in (3) above ; the resultant figure will be either surplus or deficiency as regards unsecured creditors.
5) Deduct the amount of paid up share capital to the figure as obtained in (4) above; the result will be either surplus or deficiency as regards members or contributories.
6) Any likely expenditure on liquidation should be ignored. A note may simply be given that deficiency or surplus as shown by the statement of affairs is subject to the cost of liquidation.
7) Any unrecorded assets or liability should be shown both in the Statement of Affairs and the Deficiency or Surplus Account to make double entry complete.
8) Personal guarantee given by any party including the guarantees given by the directors for loans raised by the company should be ignored while preparing the statement of affairs.